trends legal magazine

Real Estate No 8

italy – Cocuzza & Associati

The Living Room of Milan: The Galleria Vittorio Emanuele II | TRENDS Real Estate No 8

The Gallery Vittorio Emanuele II has always represented one of the most iconic places in Milan. The history, the location and the sumptuousness of the building have made “the Gallery” – as it is known by the people of Milan – one of the most attractive centres for tourists and consumers from all around the world.

From a legal point of view, the Gallery triggers quite a few challenges: it is owned by the Municipality, so, it is a “public” space. The Municipality, acting as Landlord, has used the instrument of concession (deriving from administrative law) rather than the one of lease, pertinent the latter to private properties and granting various degrees of protection to retailers / lessees.

The Gallery is composed of a number of mixed-use units, that in recent years have been at the centre of a program of valorisation approved by the Municipality of Milan. In particular, the revaluation program is focused on the concession of the units located in the Gallery to the private operators to carry out high quality commercial and restaurant activities.

In compliance with the principles of impartiality, equal treatment of economic operators and protection of competition, the concession of these properties to private companies is carried out by means of a public procedure.

In particular, the Administration first approves a resolution with which it defines the guidelines for the development of the units. Then, based on these guidelines, the Administration adopts a public call for tenders for the assignment of the concession for the use of the units.

The public call has a peculiar structure: There is a phase of pre-qualification, which aims to identify the operators admitted to the submission of offers, and a second phase in which invited operators may submit economic offers by raising the price placed at the base of the auction.

During the pre-qualification phase, the economic operators present to the Administration the individual projects. The Municipality analyses the projects, giving them a score that may vary according to the type of products on sale and the aesthetic quality of the project. In particular, the sale of jewellery, of products of excellence made in Italy, as well as the attention to aspects such as innovation, digitalisation, sustainability, and respect for the environment, will award the project a higher score.

Once the economic operators have been admitted to the tender based on the score assigned by the Municipality, the auction phase opens.  Starting from the base auction rent, the competitors will be able to offer raises. The offer that is not followed by any raise is awarded the concession.

The last phase of the procedure consists of the stipulation of the convention between the Municipality of Milan and the winning economic operator. The relationship between the Administration and the private operator – in this case in quality of landlord and tenant – will be governed by a contract that formally represents a convention-concession of public property, a public derivation of a lease agreement.

Usually, even if the public tender does not include a draft of the contract to be stipulated, it contains the essential requirements that will characterise the relationship between landlord and tenant, as well as the main charges to be borne by the economic operator (i.e. obtaining approval of the final project from the Superintendent of Cultural Heritage, carrying out architectural restoration works, using the property to the exclusive use envisaged in the public tender).

It is easy to see how the peculiarities of the property located in the Gallery are reflected in the selection procedure of the tenant and in the type of contract that is then stipulated with the Municipality.

Many companies, especially famous luxury fashion brands and restaurants are eager to carry out their business in properties of primary importance, such as those located in the Gallery. Due to the complexity of the procedure, they turn to lawyers experienced in the specific area of retail, to obtain assistance in the preparation of the preliminary project, the submission of the offers to the Administration and, last but not least, the negotiation of the contract.

Written by:

Partner

Giulia Comparini

gcomparini(et)cocuzzaeassociati.it

Junior Associate

Osvaldo Capitelli

ocapitelli(et)cocuzzaeassociati.it

Article from – TRENDS Real Estate No 8

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